Finanial Formala and Statements

Balance Sheet

Company’s assets, Liabilities and Equity

Cash Flow Statement

Shows inflows and outflows of Cash

Contribution Margin

Revenue-Variable Cost: or Gross margin

Current Ratio

Current Assets / Current Liabilities: Ability to pay short term obligations

Days inventory outstanding (DIO)

Inventory / Avg Daily COGS: How long holds inventory

Days Sales outstanding (DSO)

Accounts Receivable / Avg Daily Sales: How long to collect pay

Days Payable outstanding(DPO)

Accounts Payable / Avg Daily COGS: How long to pay suppliers

Debt-to-equity ratio

Total Debt / Total Equity: debt to shareholder equity

Inventory Turnover

Annual COGS / Inventory: How often inventory is completely sold

Leverage ratio

Total Assets / Total Equity: How much assets are paid by debt

Return on assets (ROA)

Annual Net Income / Total Assets : How effectively uses asset to generate profit

Return on sales (ROS)

Operating Income / Net Sales: percentage of profit earned per dollar of sales

Return on equity (ROE)

Annual Net Income / Total Equity: measure of return on owner’s investments

Working Capital

Current Assets - Current Liabilities

Income Statemnet

Outline revenue and expenses and calculating net income/loss

Contribution Marin Ratio

Contribution Margin / Sales: percentage of sales after variable costs

Working Capital Days

(Working Capital / Revenue)*365

Return on investment (ROI)

(Net operating income / Average operating assets) or (margin * Turnover)

Margin

Net operating income / Sales

Turnover

Sales / Average operating assets

Residual Income - investment earned above the minimum required

Net operating income - (average operating assets * Minimum required rate of return

Earning per Share

Net income / Average Number of common shares outstanding

Price-earning ratio

Market Price per share / Earning per Share

Dividend Payout

Divdends per share / earnings per Share

Dividend Yield Ratio

Dividends per share / Market Price per Share

Book Value per share

Total stockholders’ equity / Number of Common Shares Outstanding

Quick Ratio

(Current Assets - Inventory) / Current Liabilities

Cash Ratio

Cash / Current Liabillties

Total Debt Ratio

(Total Assets - Total Equity) / Total Assets: How much of the assets are financed with debt

Equity Multiplier

Total Assets / Total Equity = 1+D/E

Times Interest Earned

EBIT / Interest: How many times can it pay interest obligation with operating income

Cash Coverage

(EBIT + Depreciation) / Interest: How many times can it pay interest with operating income

Retention ratio

Additions to retained earning / Net Income = 1 - Payout Ratio: How much profit are kept instead of give to share holders

Internal Growth Rate

(ROA * Retention Ratio) / (1 - ROA * Retention Ratio): How much a firm can grow its assets using retained earnings Earning

Sustainable Growth Rate

(ROE * Retention Ratio) / (1 - ROE * Retention Ratio): How firm can grow by using generated funds and debt, but maintain a constant debt ratio

Days’ Sales in Inventory

365 days / Inventory Turnover: Days worth of inventory the company currently has

Deb to Total Assets Ratio

Total Liabilities / Total Assets: Debt it carries compared to assets